Microsoft (NASDAQ: MSFT), reported Q2 numbers exceeding most targets but showing slight drag do to the delays with Vista and Office 2007.

Revenue for the quarter was up to $12.5b from $11.8b. Earnings were down to 42.63b from $3.65b last year.

Strong Xbox sales led to a 76% increase in revenue for the entertainment and devices division. But with each Xbox sold at a loss, the division showed an operating loss of $289m on revenue of $2.96b. Guidance expects 12m units to be sold by June.

The online services division, which is chasing Google and Yahoo showed an operating loss of $155m on revenue that was up 5%. In the Search component of the division, for December ComScore Networks ratings showed Microsoft’s share of US searches down to 10.5% from just over 14% last year.